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How successful CEOs manage their middle act
Every leader understands the importance of the first hundred days or the first year in office—the period during which one must assess and diagnose, formulate a vision and a strategy, and create the early wins that build trust and legitimacy. And dozens of books and articles offer guidance about how CEOs in their final months on the job should approach their primary responsibility: helping develop and select a successor and then smoothly handing over power.
Very little attention has been focused on the time between those stages—on how chief executives can make the most of the middle years of their tenure. How can they build on early successes? How can they continue to have an impact? In what ways should they shift their priorities? Should they spend time with different stakeholders? Should they engage the organization in different ways? And how should their mindsets and ways of working evolve?
To find answers, we identified 146 CEOs of large-cap companies who left their jobs during the period from 2011 to 2016 after serving at least six years—the median term for an S&P 500 chief executive, meaning that the CEOs in our group all had a longer-than-average run. Next we pinpointed a subset whose companies outperformed their industries during their time at the helm or who had high overall total shareholder return performance. We conducted detailed, structured interviews with 22 of them, asking, among other things, how their priorities, mindsets, and approaches to leadership had evolved; what strategic and organizational moves they had focused on in midtenure; and what they wish they had done differently. (Itai Miller and Harish Soundararajan assisted with the identification of CEOs and the analysis of responses.)
Many of our interview subjects said they hadn’t consciously approached their tenure in terms of phases, but after reflecting on our questions, they recognized that it did have distinct acts. And it became clear that, as in a play, a strong first act does not necessarily guarantee success in act 2. “There are significant differences between the early phases of the CEO run, the middle term, and the latter stages,” former Cisco CEO John Chambers (in office from 1995 to 2015) told us—a sentiment echoed by many other leaders. “My management style evolved at each of the stages, and I had to reinvent myself at each one.”
At the start of midtenure—typically, two or three years in—high-performing CEOs made a conscious decision to reset by reexamining the company’s context, reassessing their agenda, and continuing to actively shape the organization and the strategy. “Organizations tend to be echo chambers,” said former Home Depot CEO Frank Blake (2007–2014). “You’re not going to mid-course-correct yourself if you don’t candidly reflect on where you went wrong and, more important, why you went wrong.”
Five themes emerged as essential to success in leaders’ middle years: the importance of resetting ambitions to avoid losing momentum; the need to attack silos and fix broken processes; the imperative of rejuvenating leadership talent; the value of building internal and external mechanisms for dissent and disruptive ideas; and the need to deploy leadership capital on bold moves that could help the company succeed over a long horizon.
In addition to recognizing these specific themes, leaders can find value in something simpler: viewing their tenure as a series of chapters rather than a single uninterrupted span.
Follow the link to continue reading. Source: Rodney Zemmel, Matt Cuddihy & Dennis Carey; Harvard Business Review.
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